The Texas 8th Court of Appeals Tuesday upheld a lower court’s decision that the city of El Paso’s environmental franchise fee tacked on to residential water bills is an illegal tax.
The court ruling Tuesday creates the possibility that the city could have to refund tens of millions of dollars collected since the levy went into effect in 2015. The case was brought by former state Rep. Joe Pickett in a lawsuit against the city.
“The opinion says it’s an illegal fee, and so I’m entitled to ask for a refund, and so if I’m entitled to ask for one, everybody in El Paso that pays a garbage and water bill is entitled to ask for a refund,” Pickett told El Paso Matters.
City officials didn’t immediately respond to a request for comment from El Paso Matters. If the city wants to challenge the latest ruling, it could appeal to the Texas Supreme Court.
The city appealed District Court Judge Patrick Garcia’s August 2024 ruling that the fee was unconstitutional and should be discontinued based on the lawsuit first filed by Pickett in October 2020.
The appeals court and trial court sided with Pickett that the $6 franchise fee is an illegal tax and not lawful “because the city used it primarily to raise general revenue rather than to cover the actual costs associated with garbage trucks’ wear and tear on city streets,” the opinion by Chief Justice Maria Salas Mendoza states.
SEE ALSO: Ex-lawmaker’s lawsuit accuses El Paso of hiding tax increases in water bills
The ruling means Pickett is entitled to declaratory and monetary judgment and a refund in the amount of fees paid from the time he filed the lawsuit in 2020 to the time of the final judgement. The city has 45 days to respond.
The ruling states that “because Pickett faced criminal penalties if he refused to pay
the fee, he paid it under duress as a matter of law, and the city is not immune to damages in the form of a refund.”
At issue is the legality of the fee, approved in 2014 and implemented in 2015, with the stated purpose of covering the cost of wear and tear on city rights-of-way by city sanitation vehicles.
The city has collected about $14 million per year from the franchise fee in recent years and anticipates collecting the same amount in the next fiscal year, city budget documents show. The city’s draft budget resolution for the next fiscal year states that the environmental service franchise fee will be used to support the city’s general fund expenditures for the Streets and Maintenance Department.
Pickett sought damages of up to $100,000 and a declaratory judgment preventing the city of El Paso from charging him or his property the fee.
Garcia ruled in 2024 that Pickett was entitled to damages for the $6 monthly fee, attorney’s fees in the amount of $33,107, appellate attorney’s fees, and about $40,000 if the city appealed, court costs and prejudgment and post judgment interest.
The post City’s environmental franchise fee on trash bills is illegal tax, appeals court rules appeared first on El Paso Matters.
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